Data centers don’t run on magic. They run on transformers, cooling systems, cable, workforce, incentives — and a supply chain that’s getting harder to manage by the day. In this episode, we go behind the curtain with Ford Graham (Parker Poe), Steven Pearce (Charlotte Regional Business Alliance), and Ermengarde Jabir (Moody’s Analytics) to unpack the real drivers of data center development. From power constraints and permitting delays to trade policy and workforce bottlenecks, this roundtable hits the realities most headlines miss.

Area Development: Let's start with introductions and a quick story. When did it hit you—just how essential data centers are?

Ermengarde Jabir: I realized how foundational data centers are during the pandemic—when remote work and e-commerce took over. Without data centers, none of that would’ve been possible.

AD: Steven?

Steven Pearce: I think it clicked for me when I bought my first iPhone. Around that time, Apple had just announced a big data center in western North Carolina. I started connecting the dots—Siri, iCloud, all of it running through that building. The whole idea that your phone doesn’t work if the data center doesn’t? That’s when it sunk in.

AD: Ford, when was your aha moment?

Ford Graham: Honestly, I was a bit late to the game. It wasn’t until I worked on a large data center investment in central Virginia three years ago that I fully grasped their critical role. Since then, it’s been a crash course.

AD: Ford and Steven, Let’s talk about your article in this issue. You mapped the supply chain behind data centers—the stuff most people don’t think about. What’s the most underappreciated piece?

FG: All of it, really. People see a big box filled with servers and assume that’s it. But you’ve got backup generators, cabling, cooling systems—an entire ecosystem. It’s deeply tied to global commerce. Most of us don’t appreciate that.

SP: I’ll get specific: the skilled labor behind these projects. Electricians, HVAC techs, low-voltage specialists—they bring these facilities to life. It’s not off-the-shelf talent. Some markets simply don’t have the specialized workforce. That’s a hidden bottleneck.

AD: Ermengarde, you agree?

EJ: Absolutely. People forget there’s rarely a daily operations team onsite—beyond security. Most technicians are flown in. And beyond labor, let’s not overlook power and water. A single megawatt can power up to 1,000 homes. Hyperscale data centers need dozens of those. And they rely on water-based cooling systems. The natural resource intensity is massive.

AD: Even politeness is expensive—didn’t OpenAI say “please” and “thank you” cost extra energy?

EJ: Yes! Every extra word is power and water spent. We need to be judicious, even with prompts.

AD: How has the approach to supply chain redundancy changed in recent years?

FG: The pace of growth and competition has forced companies to diversify. Everyone’s racing for land, power, and materials. You can’t afford to be caught waiting for a single component. Diversification has become strategy, not luxury.

SP: Exactly. Five years ago, it was all just-in-time and cost-driven. Now it’s about risk. Tariffs, pandemics, shipping delays—it’s made companies rethink their sourcing models. We’re seeing a shift toward regionalization and greater visibility, often with AI helping track every link.

AD: Ermengarde, your current piece focuses on downside risk. Any threats people aren’t talking about?

EJ: Yes—obsolescence. Not of the equipment, but the buildings. Servers and racks are shrinking fast. Many older data centers were built with far more square footage than needed today. So now we’re seeing empty space inside expensive buildings. That affects zoning, tax bases, and future land use. Municipalities might have to adjust expectations. The physical footprint of a data center won’t always reflect its power or value going forward.

AD: Let’s talk incentives. Are governments adapting?

FG: Depends on the region. Metro areas are getting more skeptical, especially when it comes to job creation. But rural areas still see data centers as high-value investments. Even with limited jobs, the property tax impact can be huge. Some states are offering long-term incentives to lock in multiple phases of growth.

SP: There’s also growing NIMBYism. Some communities don’t want them, and that’s bleeding into incentive decisions. The misconception is that no jobs equals no benefit. But not every community can support a 1,000-person factory. Data centers bring capital investment, which many regions need.

FG: In South Carolina, we’ve seen proposed legislation to limit sales and use tax exemptions for data centers, citing energy constraints. Without that incentive, it’s hard to compete. Georgia’s had similar debates. It’s a trend worth watching.

EJ: Look at what’s happening in Virginia and Maryland. Northern Virginia has long been the data center capital. But NIMBY sentiment is rising. Now Maryland counties are attracting those same projects—same users, same power, just across the river. Policy and public perception are shifting the geography.

AD: And what about tariffs? Are data center suppliers feeling the heat?

SP: Yes, but it’s murky. Components like transformers, switchgear, and UPS systems—many are still sourced from China or nearby countries. Some firms are moving production. We worked with a Toshiba-Mitsubishi joint venture expanding in Texas to assemble UPS units. But not everyone’s moving fast. The tariff situation is too volatile for rushed decisions.

FG: If I’m a CEO, I don’t change course in a 90-day window. Ten percent tariffs don’t justify it alone. But everyone’s exploring options. It’s prudent business. The wildcard is what happens next—will tariffs expand or ease? It’s too soon to say.

EJ: Exactly. There used to be a loophole: export to a third country and import to the U.S. That’s been closed. Nearshoring saw momentum early in the 2020s, but high interest rates and workforce limitations cooled it. For now, most are watching and waiting.

AD: Let’s wrap with a lightning round: Ten years from now, what’s the big data center conversation?

SP: Probably something none of us predicted. But I think the big issues—energy and NIMBYism—aren’t going anywhere. Can we power the future? Will communities embrace or resist? If we don’t solve that, innovation may not be enough.

FG: I worry about infrastructure. Who pays for the new generation—utilities, customers, or companies? If we develop solutions like small reactors but face public opposition, we’ll stall out. On the bright side, maybe we’ll repurpose older data centers into new industrial uses. That’s a good problem to have.

EJ: I agree—demand will continue to grow, but location strategies will evolve. As power delivery gets more specialized, we may see data centers shift further from urban cores. The only certainty is change.

AD: That’s a great note to end on. Thanks to all of you—this was smart, timely, and generous. We’ll do it again soon.

W. Ford Graham, Senior Vice President, McGuireWoods Consulting.
Ford has a depth of experience working in the economic development sector, where he has been one of the leading recruiters of international companies to the Southeastern United States. He has facilitated new industry and industrial expansion in over 123 projects, which have resulted in commitments of more than 11,000 new jobs and $3.9 billion in new investment. Ford’s practice focuses on companies opening or expanding operations in the U.S. In addition to economic incentives, Ford assists companies with the full spectrum of legal needs that arise when companies enter new markets.

Steven Pearce, VP, Infrastructure and Economic Development, McGuireWoods Consulting.
Steven Pearce is a vice president on our national infrastructure and economic development team, where he advises clients on complex, high-value projects across the country. He specializes in guiding companies through the stages of the site selection process, helping them navigate incentives, infrastructure and stakeholder engagement to bring major investments to life.

Ermengarde Jabir PhD, Director of Economic Research, Moody’s
Ermengarde Jabir PhD is a Director of Economic Research at Moody’s, specializing in commercial real estate. Her research interests include the intersection of REITs and the macroeconomy and she has been published in academic journals as well as industry publications.